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For more on Tesla's latest earnings miss, let's welcome in Tom Ryan, RBC Capital Markets Global Autos analyst. Uh Tom, always good to see you. So, Tesla shares under some pressure in the after hours. Um you know, obviously the stock, listen, Tom, it ramped into this print. But we are down about four and a half percent. Let's get your take to start with, Tom. What what do you make of the report?

Yeah, I mean, you guys mentioned the um gross margin is what everybody looked at. It looks like a beat. But if you look at the the uh the uh data that came out, a lot there was a big piece of this was regulatory credits. Uh so I do think if you X those out, um that may be kind of is a little different. Uh those presumably come at very high margins, right? So, excluding that, I wonder what the margin would be. I'm still kind of going through the math there. Uh certainly there was a lot of fears that there was discounting happening. That's why they had that bigger uh delivery number. So this kind of maybe confirms that a little bit. Um also energy storage, which is a big story that pushed the stock higher, as you guys mentioned, the past month. Um not bad. Uh margins look like was flat quarter to quarter, 25% gross margins, which is better than the auto business, but it's flat despite doubling revenues. So folks may wonder if there were some pricing uh cutting happening there. And then the last thing I would mention is outlook section. There's really no change there. Uh maybe some folks might have been hoping for some more color on the new lower price vehicle coming in 25, something more on the robo taxi uh news delay. But as as always the case with this stock, um whenever the release comes out, however it trades right now is almost irrelevant. You have to really look at what happens on the call, right? Um a lot of information comes out of that two-hour call that starts at uh at at 5:30 Eastern.

Yeah, so there's a good chance that the robo taxi stuff and maybe more around the timing of the production of the next gen vehicle, maybe that'll come out in the call. I want to come back to something you were talking about with the margins ex-regulatory credits. Now, I see Bloomberg at least crunch the numbers, they put it at 14.6%. Whether that will end up matching with your estimates, we'll see, but that leads me to ask then, this whole debate, you know, the whole new sort of bromance between Elon Musk and former president Donald Trump, Trump saying he's going to remove many of the incentives for the auto industry, in theory at least, I mean, we don't know what's going to happen, would that remove those regulatory credits, and then what effect does that have on Tesla's business?

Yeah, that's one part of it is around regulatory credits, and then consensus actually had something like a 165. Okay. So if it was a 14 handle, that's definitely a miss. Um uh so that's probably what's behind that. I think the bigger issue is is, yeah, if they go after the IRA and the $7,500 credit, uh that would be a problem. The number one reason why people aren't buying as many EVs as people had hoped for was is pricing, pricing, pricing. So, it's a reason why Tesla and and many others are really trying hoping for uh those IRA credits to remain um and and that's what would cause the deliveries to inflect next year. The only thing I will say is it will be really difficult for any administration to neuter the IRA. Uh it's a lot of jobs, right? And it's in states like Ohio, Michigan, I think Tennessee for GM and uh you know, it's a lot of jobs. And so I think it'll be very also law, very difficult to overturn a law like that. Um but certainly there's things that an administration can do. Uh they can go after Chinese batteries, which Tesla does use, almost everybody does. There's things you can do to challenge those credits. So I'm not saying it has no effect. It definitely has some effect, but but it'll be very difficult to overturn the IRA, which Tesla definitely relies on.

What about that robo taxi event, Tom? What are your expectations?

Yeah, uh it's anybody's guess. Um definitely it's a narrative changing thing. You guys know that's my big thesis for for the stock. I I I think potentially what caused the delay had more to do with them seeking, I know they said it had to do with some design issues, but I do wonder, and many investors wonder, but it has to do with them trying to get regulatory approvals to launch a service similar to, let's say, Waymo or Cruise have, right? That would be what makes sense. But it's difficult. You have to get California, etc. to to approve that. So I do wonder if that's what's happening here. I mean, we don't know. That's what some investors are saying um as to why it got delayed to October. Uh but yeah, it's very important, obviously. Uh we heard from GM this morning. Uh they have abandoned their their um origin purpose built vehicle, a robo taxi. They're instead going to use the bolt uh to do this, which is very interesting. I think Tesla is going ahead with the purpose built vehicle. I'd love to hear what they have to say about that on the call. Um so it seems like everything is kind of on track there. But I think investors, they want something real. They don't want just a bunch of PowerPoint slides when they eventually unveil this. I think they'll want details on timing, profitability, and they'll want something within six months to a year, not 10 years down the road.

Okay. So just then, Tom, to summarize and bullet point it here, what are the top three things you want to hear from that call?

I want to hear about gross margins, um you know, what they were X everything, um and what the company thinks that will be going forward if there were some one-timeness that happened in the quarter. Uh I want to hear about the car in 2025 H1. Is this really a different car, or is it kind of a refresh of a Model Y? That's what everybody wants to know. And concrete rationale behind robo taxis delay, what exactly is happening, something of what we could expect from a service like that. And then lastly, to energy storage, uh what's going on with the margin? Why was it flat? I think some folks were hoping that it would be higher. Still a great business. But yeah, those would be the four things I would say.